FTSE 100 Modern Slavery Act.Pdf

FTSE 100 AT THE STARTING LINE

An analysis of company statements under the UK Modern Slavery Act Executive Summary 1

Tiering of Statements 3

Introduction & the Act 4

Methodology 5

Findings 6

Structure & Supply Chain 7

Policies 8

Due Diligence 9

Risk Assessment 10

Effectiveness 11 About Business & Human Rights Resource Centre Business and Human Rights Resource Centre is an Training 12 international NGO that tracks the human rights impacts (positive & negative) of over 6500 companies in over 180 countries making information available on its nine language website. We seek responses Wider Trends 13 from companies when concerns are raised by civil society. The response rate is over 85% globally. Recommendations 15 Our Modern Slavery Act Registry Business & Human Rights Resource Centre FTSE 100 Table 16 launched its Modern Slavery Act Registry in Febru- ary 2016. The Resource Centre actively monitors the release of company statements and adds them to its free and open registry to allow comparison and benchmarking of companies’ policy and practice. The Registry of over 760 statements grows daily; investors use it to assess company risks, and consumers and activists can use it to reward leading companies and press laggards to take action. Companies also use it to learn from their peers. A live dashboard enables users to explore statements by sector and country of company headquarters.

If your company has produced a statement to comply with this legislation that you would like to appear in the Registry, please send it to Patricia Carrier ([email protected]). EXECUTIVE SUMMARY

The UK Modern Slavery Act is a landmark piece We analysed the 27 statements and placed them of legislation that has tremendous potential to in 10 scoring tiers: with 1 being the highest tier make the step change we need from companies and 10 the lowest. We checked whether state- to tackle the curse of modern slavery and traf- ments met the minimum requirements of the ficking in their operations and supply chains. Act and also assessed how well they reported Our analysis of 27 company statements pro- against the six criteria suggested in the Act. In duced so far by FTSE 100 companies under carrying out this analysis we used guidance the UK Modern Slavery Act reveals that only provided for companies by the Home Office and a handful of leading companies are reporting CORE Coalition. and demonstrating rigorous action. On a more positive note, another handful report increased Our analysis shows patchy compliance with efforts and policy change in response to the Act. the Act from this group of FTSE 100 companies. Just a small number of leading companies The transparency in supply chains clause of the including Marks & Spencer (M&S) and SAB Act requires companies with a turnover of over Miller1 have produced rigorous statements that £36 million with operations in the UK to produce describe robust action in some, but not all, of the a statement outlining the steps they have taken criteria. These companies already demonstrate to rid their operations and supply chains of better practice for laggard companies to follow. modern slavery and trafficking. This statement Unsurprisingly, no company receives a top score must be approved by the Board and signed by in any area of measurement: this is the first year a company director (or equivalent), and ac- of reporting. cessible from the homepage of the company’s website. The UK government suggests, but However, while it is clear that there is still a long does not require, that companies describe their way for companies to progress, the Act is al- organizational structure, risks, company policies ready driving change. For example, BT reported and due diligence to eliminate those risks. that since the enactment of the Act, it has de- cided to assess its business operations, particu- The performance of the FTSE 100 is a litmus larly in the area of recruitment, to identify risks test of business action to combat slavery. With of slavery and human trafficking. Severn Trent their resources and experience, these compa- has revised its standard supplier contracts to in- nies should be leading the rest. There were 16 clude modern slavery provisions that require not FTSE 100 companies that had statements due only their suppliers, but also suppliers’ sub-con- by 30 September, all of which published a state- tractors, to comply with the Act. Sky has carried ment by the deadline. An additional 11 FTSE out a risk assessment across its operations spe- 100 companies published a statement by that cific to modern slavery. The Act demands that time, prior to their deadlines. companies report on their progress annually and we expect to see year on year improvements. 1. SAB Miller was acquired by AB InBev on 10 Oct

1 Key findings: ers should look to reward companies that are »» The highest performing companies provide taking action and are open about the risks they details on their risks, detail instances of mod- face, and push laggard companies to up their ern slavery and explain how these have been game. addressed. These companies are M&S and SABMiller. Now is the moment to ensure that the momen- »» No companies reach the top two tiers; the tum and opportunity created by the Act - to sig- majority of companies languish in the bottom nificantly improve corporate action on modern half -tiers 5-10. slavery – is not lost. The FTSE 100 should be »» Most companies provide very little informa- leading on this, but only a small number so far tion on the structure and complexity of their are showing that they are up to this task. The supply chains. Even less information is avail- next tranche of company statements are mostly able on specific risks in the supply chain, due in 30 December 2016. These, and the both with regard to the type of risk and where laggards in this report, can learn from the best in the supply chain the risk was identified practice of leaders highlighted in this report. (sector or location). »» Efforts to measure the company’s effective- Key Recommendations ness in ensuring that slavery and human »» The next tranche of FTSE100 companies are trafficking is not taking place in business or due to report in December 2016. They should supply chains was the lowest scoring cat- seek to leap-frog the majority laggards in egory. 15 companies provide no meaningful this report to demonstrate rigorous efforts to information on how they measure their ef- eliminate slavery, and provide the leadership fectiveness at combatting slavery. Only two expected of the largest companies. companies report developing performance »» UK Government should publish a list of the indicators: M&S and Vodafone. companies required to produce statements »» Only 15 (56%) company statements fully and under the Act; support open free accessible explicitly comply with the minimum require- information regarding company compliance; ments of the Act (i.e. they had explicit board and take measures to enforce the obligations approval, were signed by the appropriate of the Act and promote their reporting guide- person and a link to the statement was found lines. on the company homepage). Babcock In- »» UK Government should work with govern- ternational did not meet any of the requirements in the European Union, USA, Canada, ments. and emerging markets to create common legislation internationally to drive due dili- The generally poor standard of statements in gence and access to remedy. this first batch of FTSE 100 statements high- »» Advisors, lawyers and consultants should lights the importance of the UK Modern Slavery promote a transparent, systemic and collab- Act: mandatory transparency can spur laggards orative approach to eradication, and advise to take action and follow leading companies’ against a tick-box approach to reporting. better practice. Company leaders play a deci- »» Investors should reward companies that sive role in setting the culture of the company demonstrate due diligence to avoid slavery regarding the eradication of slavery. Others and provide remedy. have a role too. Advisors, lawyers and consultants working in this space can urge companies to produce statements in line with the spirit of the Act, rather than encouraging a box ticking approach. Investors, civil society and consum-

2 01 TIERING OF STATEMENTS

 03 Marks & Spencer SAB Miller

 BT Group  BETTER 05 Burberry Group  STATEMENTS Vodafone Group

BHP Billiton  WEAKER

06 Imperial Brands STATEMENTS Sky 

3i Group  Johnson Matthey  Smiths Group 07 Compass Group  Land Securities Group DCC Severn Trent

Berkley Group Holdings Dixons Carphone  Sage Group 08 British Land Company*  Legal & General United Utilities  Capita National Grid 

Experian*  09 Provident Financial  SSE  = Met minimum requirements. See page 6 for the assessment criteria in detail.

Babcock Intl. * Provided a statement shortly before publication to 10 confirm that their board has approved their Modern Slavery Act Statement, bringing them inline with the minimum requirements we detail on page 6. 3 INTRODUCTION According to the International Labour Organisation(ILO) around 21 million men, women and children around the world are in some form of slavery. The Walk Free Foundation has the figure at closer to 36 million, while the UK Prime Minister has set the number at 45 million, with 10,000 to 13,000 victims in the UK alone. The illicit profit from modern slavery estimated by the ILO is $150 billion a year, much of it in corporate supply chains. Modern slavery takes many forms and the majority of companies will face the problem of slavery some- where in their supply chains.

The Business & Human Rights Resource Centre covers reports of modern slavery on an almost daily basis; from migrant workers in the construction industry in Qatar to the alleged trafficking of Cam- bodians forced to work in the Thai seafood industry, from the fishing industry in Ireland to allegations concerning car washes used by major motor dealers in the UK. See further reports on modern slavery here.

THE UK The UK Modern Slavery Act (Act), the first legislation of its kind in Europe, was passed into law in 2015. Section 54 of the Act requires MODERN every organisation with a total global annual turnover of £36m which SLAVERY ACT carries on a business (or part of a business) in the UK to produce a slavery and human trafficking statement for each financial year.

The statement should set out the steps the organization has taken in that year to identify and eradicate modern slavery from both its own METHODOLOGY business and its supply chain.

There are two legal requirements the statement must meet:

a. The statement must be published on the company’s website, and a link to the statement must be placed in a prominent place on the website’s homepage if it has one; and b. The statement must be approved by the board of directors (or equivalent management body) and signed by a director (or equivalent);

The legal requirements are important for two key reasons:

»» By having the statement in a prominent place on the homepage of the website, it is available to anyone who wishes to read it. Many of the statements that have been collected on the Business & Hu- man Rights Resource Centre Modern Slavery Act Registry were buried in the companies’ websites. »» Requiring the statement be approved and signed by top-level decision makers aims to encourage senior-level buy-in and accountability. A successful business strategy to eradicate slavery requires leadership, and company-wide involvement.

4 In addition, the Act suggests statements include information on -

a. the organization’s structure, its business and its supply chains; b. its policies in relation to slavery and human trafficking; c. its due diligence processes in relation to slavery and human trafficking in its business and supply chains; d. the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk; e. its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; f. the training about slavery and human trafficking available to its staff.

Under the Act, companies with a financial year end on, or after, 31 March 2016 were due to publish their slavery statement within 6 months1 (30th Sept 2016). The next tranche of FTSE100 companies are due to report in December 2016.

1. The Act states that businesses should publish their statements as soon as rea- sonably practicable after the end of each financial year. While the Act does not set a deadline for this, Home Office guidance suggests companies should publish their statements within six months of the end of the financial year.

METHODOLOGY This briefing analyses statements published by FTSE 100 companies due to publish statements by 30 September (as well as those that published statements early). We chose the FTSE 100 companies for our first briefing analysing company performance under the Act for three reasons:

1. They are the UK’s largest companies with annual turnover figures well above the £36m threshold (3i has one of the lower annual turnovers of the FTSE 100 at £824m while others, such as BP, have an annual turnover of £226bn) – these companies should be leading, and providing powerful examples of better practice for smaller companies to learn from; 2. These companies typically have complex operations and supply chains with a global reach providing a wealth of information valuable in assessing modern slavery worldwide; 3. As large publicly listed companies, the information provided on company performance will be useful for investors as they engage these companies on how they are managing these risks.

There were 16 FTSE companies with statements due by the 30 Sep- tember, all of which published by that date. We also analysed statements from an additional 11 FTSE companies that had published statements prior to their deadlines. Each company was scored on the quality of their reporting on the suggested six criteria in the Act. We also determined whether they met the minimum requirements as follows: 5 »» Approval – statements have to explicitly mention approval by the board or equivalent »» Signature – statements have to provide evidence of ownership by an appropriate person evidenced by a signature with the name and title of a director (or equivalent). A statement without a signature but with the name and title of an appropriate person met this requirement. A signature alone without a name or title did not meet the requirement. »» Website – A link to the statement had to be on the homepage of the company’s website, or a link to the statement found on a drop-down menu on the homepage.

In analysing the quality of the reporting across the six categories suggested in the Act, we primarily looked at the guidance published by the Home Office and CORE Coalition as well as our own knowl- edge and experience concerning corporate action on modern slavery. Both the Home Office and Core Coalition publications provide detailed explanations of why each of the categories is important to understanding, assessing and managing slavery and human trafficking risks in a company’s operations and supply chain. They also include suggested actions companies should take and information that should be included in statements. We scored reporting on each of the six categories from 0 to 5 looking at how much information was provided as well as the quality of the information. There was a total of 30 points available for each company. Some companies received 0 points in certain categories. No company received a score of 5 in any category.

Companies that did not have polices or processes in place but stat- ed an intention to develop and implement them were awarded points for stating intention, and in some cases this was considered good practice. Generally, all statements should reflect continued progress and improvement year on year, whether a company is starting from scratch or is already taking steps to address these issues.

The companies were divided into 10 tiers with tier 1 representing excellence and tier 10 indicating no, or only cursory, effort.

FINDINGS No company wants modern slavery in their operations or supply chains. Yet the majority of companies in this analysis failed to provide insight into how they were seeking to eradicate slavery. There is a lack of information being provided, despite the Act’s aim of transparency. This reflects broader, poor reporting we have seen in the 760 statements we currently have on the Modern Slavery Act Reg- istry. It is especially disappointing given these are FTSE 100 companies that have substantial financial and human resources to conduct meaningful due diligence. However, this disappointing performance illustrates the importance of the UK Act to focus leaders’ minds, and spur improvement from laggard companies.

6 STRUCTURE, BUSINESS & SUPPLY CHAINS 1.8 Average score out of 5

Most companies provided some description of their business structure, services, products and customers. However, reporting on supply chains was weak, despite the fact that many FTSE 100 companies have complex global supply chains. Some companies simply state how many suppliers it has in its first tier. No company reported substantially on suppliers in its second tier or beyond (where the risks of slavery increase). National Grid had a particularly bare statement and simply said: “National Grid plc is an international electricity and gas company based in the UK and north eastern US. We have international supply chains which provide goods and services to our businesses.”

Example of good practice

Burberry’s statement describes in detail the company’s main products, the company structure & subsidiaries (including outside the UK) and locations of its operations. In addition, the statement provided extensive detail about the structure and complexity of its supply chains by company division, including the locations of its suppliers by region.

What the Home Office says:

A company needs to understand its own supply chains in order to identify risk and report on it. This section of the statement should include the sector(s) the business operates in; whether any of its work is seasonal; the organizational structure and group relationships; the countries it sources its goods or services from including high risk countries where modern forms of slavery are prevalent; the make-up and complexity of the supply chains; the businesses operating model; relationships with suppliers and others, including trade unions and other bodies representing workers.

For in-depth information see CORE Coalition guidance.

7 POLICIES IN RELATION TO SLAVERY & HUMAN TRAFFICKING 2.1 Average score out of 5

Most companies reported having some sort of Director, who is a member of Vodafone’s Global formal or informal policy under which they did Senior Leadership team. not conduct business with partners that demonstrated unethical business practices. Many SABMiller’s statement describes stakeholder companies reported having relevant policies engagement in its policy development. It says and codes of conduct in place. However, often that in developing its Human Rights Policy and these codes did not specifically address slavery its Supplier Code of Conduct, the company and human trafficking, or they only address la- sought input from across the business, consult- bour issues within corporate operations but not ed with external human rights and legal experts in the supply chain. and drew on conversations with other partici- pants of UN Global Compact and AIM-PROG- Reporting was particularly weak with regard to RESS (a sector initiative to improve working development and oversight of relevant policies conditions in global supply chains). by senior management, and internal and external stakeholder involvement in policy development. Effective, well-rounded policies should have input from parties within the company that deal with modern slavery issues, but also stakeholders outside the company that represent potentially affected rights holders.

Babcock International and SSE did not provide any information in this category.

Examples of good practice

Vodafone’s Code of Ethical Purchasing (Code) What the Home Office says: applies to every supplier and is based on international standards including the Universal Clear organizational policies demonstrate a commit- ment to this issue and ensures that appropriate and Declaration of Human Rights and the Interna- coordinated action is taken throughout the business. tional Labour Organization’s Core Conventions These policies and approaches may need upgrading as on Labour Standards. The Code specifically the years pass, and as understanding of the issue and addresses slavery and human trafficking. The approaches to address it improve. This section of the Code is overseen by the Vodafone Group Board statement should include the process for policy development; Policies that concern business relationships, through the Group’s Chief Financial Officer, for example, a Supplier Code of Conduct; Recruitment who is an Executive Director of the Group and policy; Procurement policy and incentives to combat also sits on the Group Executive Committee. modern slavery; Employee code of conduct; Policies Development and implementation of the Code concerning access to remedy, compensation and justice is led by the Group Supply Chain Management for victims of modern slavery; and Polices that relate to staff training and increasing awareness of modern slavery

For in-depth information see CORE Coalition guidance. 8 DUE DILIGENCE PROCESSES 2.3 Average score out of 5

It was encouraging that many statements said (Retail Operations, Property, Logistics, HR, IT modern slavery has been or will be included in and International, Foods, Clothing & Home) are aspects of companies’ processes to mitigate responsible for compliance in their respective risks. For example, several companies have departments and for their supplier relationships. revised (or are in the process of revising) their processes, such as pre-qualification question- Vodafone requires suppliers to have modern naires, to include modern slavery before engag- slavery provisions in their supply chain con- ing potential new suppliers. Others now require tracts, cascading responsibility down the sup- suppliers to agree to modern slavery provisions ply chain. Supplier commitments under the in writing. Examples of internal measures by Code of Ethical Purchasing extend through the companies include the creation of new inter-de- supply chain so that a supplier with whom the partmental committees to deal specifically with company has a direct contractual relationship (a issues of modern slavery. Tier 1 supplier) in turn bears the responsibility for ensuring compliance across their own direct However, no company reported having a griev- supply chain (a Tier 2 supplier from Vodafone’s ance mechanism in place that was specifically perspective) and so on. targeted at supplier’s workers or requiring suppliers to have a grievance mechanism in place. Vodafone’s statement also details its assess- Rather, companies reported having whistleblow- ment of potential suppliers’ risk of forced labour. ing helplines, or similar, for their own employees Potential new suppliers rated as higher risk are to be able to voice concerns. While the en- required to provide evidence that they operate couragement of whistle-blowers is an important ethically and responsibly in line with Vodafone’s step, a business-level grievance mechanism Code of Ethical Purchasing requirements. targeted to workers in the supply chain allows non-judicial accountability and remedy. There was also weak reporting on stakeholder en- What the Home Office says: gagement, particularly with NGOs and trade The UN Guiding Principles on Business and Human unions. Given the known problems with social Rights specify that due diligence processes should audits, companies should not rely heavily on ‘include assessing actual and potential human rights this process in their due diligence. In order to impacts, integrating and acting upon the findings, understand and mitigate their risks companies tracking responses, and communicating how impacts are addressed. This section of the statement should need to collaborate both with their competitors include actions taken to understand the businesses op- and civil society, to identify the risks and how to erating context; Details of risk management processes, address them. including monitoring and evaluation measures; Impact assessments undertaken; Action plans to address and risk/actual instances of modern slavery and how actions Examples of good practice have been prioritized; Evidence of stakeholder engagement; Business-level grievance mechanisms in place M&S’s statement details actions taken to em- to address modern slavery; Actions taken to embed bed respect for human rights throughout the respect for human rights and zero tolerance of modern organisation. This year M&S formed an internal slavery throughout the organization. governance structure on modern slavery and For in-depth information see CORE Coalition guidance. human rights at both operational and leadership levels. The Directors of each business area 9 RISK ASSESSMENT & MANAGEMENT 2.2 Average score out of 5

Several companies reported having conducted Each HRIA is required to be verified every risk analysis on their operations and supply three years through an engagement process chains based on the nature of the goods or with stakeholders. In medium and high-risk services supplied or countries in which the sup- jurisdictions, the HRIA must also be validated pliers operated. A few stand-out companies every three years with a qualified human rights reported on having conducted assessments specialist. The HRIAs are required to consider focused specifically on modern slavery or la- risk areas relevant to the extractives sector, bour risks. However, there was no reporting including (among others) forced and child la- on engagement with potentially affected rights bour; diversity and non-discrimination; freedom holders and other stakeholders, which is an im- of association and collective bargaining; and portant aspect of a thorough risk assessment. workplace health and safety. Where a HRIA identifies a material risk, a Human Rights Man- Provident Financial did not provide detailed agement Plan is required to be implemented information in this category. and reviewed annually, and must include employee and contractor training on compliance Examples of good practice with BHP’s human rights commitments and the risks identified. M&S was the only statement that explained in detail how it had mapped its supply chains to assess particular industry/sector and geographi- cal risk. These assessments cover the entire scope of the business, encompassing Retail Operations, Property, Logistics, HR, IT and International, as well as product supply chains. As a result, the company has worked with leading experts on visits to second and third tier What the Home Office says: sites in its supply chains in Indonesia, Vietnam, Malaysia and the Philippines. If an organization has properly assessed the nature and extent of its exposure to the risk of modern slavery, it will be more able to take targeted action to find Sky conducted a specific modern slavery risk it, to remedy it, and to prevent it occurring in the future. assessment across its own operations and all Modern slavery risk assessments should be seen as its suppliers to understand where to focus atten- part of an organization’s wider approach to risk man- tion. It identifies a number of areas which carry agement and could form part of more general risk a heightened risk including its use of catering assessments. Assessments should be able to identify the risks and issues, properly assess their level of services, electronic manufacturing and property importance, and ensure that appropriate remedies are services. in place. Identifying relevant information from internal and external sources will help businesses to undertake BHP Billiton’s Our Requirements standards effective risk assessments and appropriate review of require all BHP Billiton operations to complete those risks. a Human Rights Impact Assessment (HRIA). For in-depth information see CORE Coalition guidance.

10 EFFECTIVENESS 1.0 Average score out of 5

This was the lowest scoring category. Fourteen that in order to assess the effectiveness of the companies did not provide any information at measures taken it will be reviewing the follow- all. Information provided tended to be general ing key performance indicators and reporting on statements of how the company keeps track of them in future Modern Slavery Act Statements: the number of employees take part in training or that it keeps track of complaints from grievance »» staff training levels; mechanisms. In some cases, figures were »» actions taken to strengthen supply chain au- provided. Only one company, M&S, detailed diting and verification; specific Key Performance Indicators (KPIs) it »» steps taken to upskill high risk suppliers, and uses in respect of modern slavery. assessing their ability to detect and mitigate modern slavery risk in supply chains; and 3i, Babcock International, British Land Com- »» investigations undertaken into reports of pany, Capita, Dixons Carphone, Experian, Modern Slavery and remedial actions taken Legal & General, National Grid, Provident Fi- in response. nancial, Smiths Group, SSE and United Utili- ties did not provide information in this category.

Example of good practice

SABMiller disclosed the risks it identified through its audits, detailed the action plans it put in place, and demonstrated that these findings inform its business decisions. The company has instituted a supplier accreditation pro- gramme. Suppliers identified as high risk are required to undergo an ethical audit of their pro- duction sites conducted by independent audi- tors. All high risk suppliers that have completed an ethical audit are provided with a corrective What the Home Office says: action plan and monitored for progress against This section of the statement could include disclosure the plan. SAB Miller were able to detail specifi- of any identified instances of modern slavery and of cally the amount of risk management gaps iden- results of any corrective action plans; company-level tified and how many had been resolved through grievance mechanisms in place, number of complaints improvements made by suppliers following cor- made through these mechanisms and their resolution; remedy and compensation provided for labour rights rective action plans. The company says it has abuses; the publication of any performance indicators either terminated or not initiated relationships used, including detailing if and how business decisions with 120 suppliers who have shown either no are informed by performance indicators; and evalua- willingness to meet its requirements or no sign tions of the effectiveness of training, formally or infor- of wanting to make improvement within a rea- mally. sonable timeframe. For in-depth information see CORE Coalition guidance.

M&S was the only statement to detail the KPIs it uses in addressing modern slavery. It says 11 TRAINING 1.4 Average score out of 5

Statements generally said training on the cor- and possible actions to take in the event that an porate code of conduct or some other ethical incident of modern slavery is identified. Burb- standards was provided to employees. In some erry is also in the process of developing online cases, training on human rights was provided. training to be rolled out to all supply chain part- Few statements said the company provides ners. Participation and completion of the train- training specifically on modern slavery and ing will be recorded and monitored by nominat- fewer said the company provides that training ed individuals at Burberry. to high level executives, targets it to specific, relevant groups in the organization or provides it on a continual basis, for example, annually.

Babcock International, Capita, Dixons Car- phone, Legal & General did not provide information in this category.

Examples of good practice

M&S provides bespoke Modern Slavery training for M&S Food suppliers. In addition, all UK M&S Food suppliers employing migrant workers are required to have attended Stronger Together workshops, and to have cascaded the training within their supply bases. Over 200 at- tendees from the M&S supply base have taken part in this training to date.

The company has trained its key staff in Modern Slavery and human rights using an expert 3rd party consultancy and then used that consultancy to support each business area in map- What the Home Office says: ping, risk assessment and developing mitigation response. Training is a fundamental way of raising awareness and ensuring that people understand the importance of As a result of Burberry’s Human Rights Im- a particular issue. It also helps people to understand what they need to do, and how to work together in- pact Assessment, specific modern slavery and ternally or externally if they encounter something that labour rights training is currently being devel- raises concerns. Training may be targeted at different oped for key Burberry employees who interact groups of employees within a business, including lead- with Burberry’s supply chain networks. It is also ership, or at different businesses within a supply chain, intended to support those travelling to supply and the training itself could take a range of different forms. It may range from detailed training courses to chain facilities so that they are familiar with the broader awareness-raising programmes. risk areas, likely indications of modern slavery For in-depth information see CORE Coalition guidance. 12 WIDER TRENDS

Our Modern Slavery Act Registry currently holds We have seen numerous statements with iden- over 760 company compliance statements. The tical wording, for example, when describing key majority are not of high quality, and would likely performance indicators. This is information that score below 5 using the indicators above. While should be tailored to each company and the use this is the first year of reporting and many com- of this pro forma language leads us to believe panies are on a learning curve with regard to that companies are using templates or out- modern slavery, too many companies are using sourcing their statements to consultants rather a tick-box approach, incorporating key words than creating a statement based on thorough and generic language without providing sub- due diligence. stantive or meaningful information. Often information provided is not relevant. For example, Another issue is that companies do not appear many statements say that training is provided to understand which businesses in their group on a company’s code of conduct, but the code are required to produce statements. Home Of- does not include anything related to modern fice guidance states each parent and subsidiary slavery or relevant labour issues. Some state- organization (whether it is UK based or not) ments only report on a company’s own opera- that meets the requirements set out in Act must tions, such as reporting on risk assessments produce a statement of the steps they have within their own operations without also undertaken during the financial year to ensure slavery taking scrutinising supply chains. This almost and human trafficking is not taking place in any wilful misunderstanding of the intention of the part of its own business and in any of its supply Act demonstrates that there is a key role for the chains. If a foreign subsidiary is part of the par- government to play around enforcement. ent company’s supply chain or own business, the parent company’s statement should cover Many companies believe, as they say in their any actions taken in relation to that subsidiary statements, that their modern slavery risks to prevent modern slavery. As such, seeking to are low but did not provide evidence to sup- cover non-UK subsidiaries in a parent company port this. Rather than simply stating the risk is statement, or asking those non-UK subsidiar- low and using this as a reason not to conduct ies to produce a statement themselves (if they proper due diligence, a better approach would are not legally required to do so already), would be to approach the issue as Land Securities represent good practice and would demonstrate is doing. Its statement says: “We are confident that the company is committed to preventing in our management and assessment of the low modern slavery. This is highly recommended, risk exposure to slavery and human trafficking especially in cases where the non-UK subsid- existing in our operations and with our people. iary is in a high-risk industry or location. However, we appreciate there is further due diligence and risk assessment that needs to be Instead we see UK-based subsidiaries pro- undertaken, and improvements made to our cur- ducing statements but often not from the cor- rent processes and procedures, before we can responding parent. Where parent companies say that we are adequately managing this risk in produce a statement which says it covers sub- our business and supply chain.” sidiaries as well, those statements do not detail steps taken by those subsidiaries, rather it is a

13 blanket statement which really only covers the business and supply chain that are vulnerable steps taken, if any, of the parent. to exposure.

Companies that are preparing their statements The Modern Slavery Act Registry created by have shared with us some of their challenges. Business & Human Rights Resource Centre Some companies have indicated that Board- aims to increase transparency around how level buy-in is lacking and that consequently it companies are tackling modern slavery. By has been difficult for action to eradicate modern having all statements available on a free and slavery to be embedded throughout the organi- public registry, everyone is free to benchmark zation. In practice the approach to dealing with them, recognize and share good practices, and modern slavery issues tends to be dispersed expose weak reporting. throughout different corporate functions and lacking strategic oversight. This also leads to a However, given the number of companies that situation within a company where one depart- fall under the requirements of the Act, maintain- ment is taking actions against modern slavery ing a comprehensive registry of existing state- unbeknownst to other relevant departments, ments is no small challenge. The Government rather than departments acting together toward can support civil society in this by publishing a a cohesive policy or process. Successful and list of companies required to produce a state- effective action must be inter-departmental with ment under the Act. top-level leadership and guidance.

Companies have also said that their legal departments are overly risk averse and advise against the level of transparent reporting that we expect to see in statements. Lawyers are advising companies not to disclose instances or risk of modern slavery in operations and supply chains. If other companies, particularly in the same sector, are not producing detailed reports, the companies do not want to stand out from the pack by providing more information than their peers.

There must be a fundamental change in how companies approach disclosure, especially with regard to modern slavery. While we understand the barriers to be overcome in disclosing risks, companies that publish detailed statements detailing actual risks or instances of modern slavery, alongside plans of how they plan to tackle this risk, are demonstrating leading practice. Companies must understand that in this digital age putting your head in the sand is not an option. It is those companies that have failed to grapple seriously with the risks in their

14 RECOMMENDATIONS

»» FTSE 100 companies should use their considerable resources to take systemic action to eliminate modern slavery from their operations and supply chains. The next tranche of FTSE100 companies are due to report on or around 30 December 2016. They should seek to leap-frog the majority laggards in this report to demonstrate rigorous efforts to eliminate slavery, and provide the leadership expected of the largest companies.

»» All businesses required to report under the Act should consult the Home Office and CORE Coalition guidance, and pay particular attention to emerging better practice of leading companies such as that outlined in this report.

»» UK Government should publish a list of the companies required to produce statements under the Act; support open free accessible information regarding company compliance; and take measures to enforce the obligations of the Act and promote their reporting guidelines.

»» UK Government should work with governments in the European Union, USA, Canada, and emerging markets to create common legislation internationally to create mandatory transparency; mandatory due diligence (as the US Trade Facilitation and Trade Enforcement Act does); and government incentives in the form of access to public procurement contracts for those demonstrating due diligence and access to remedy (as the US Disclosure Requirement does). Companies rightly do not want a spaghetti soup of diverse national legislations on this global issue.

»» Advisors, lawyers and consultants should promote a transparent, systemic and collaborative approach to eradication of slavery, and advise against a tick-box approach to reporting. Investors should reward companies that demonstrate due diligence to avoid slavery and provide remedy.

»» Civil society should seek to support a ‘race to the top’ by benchmarking companies, and providing a reputation reward for companies with better practice and reputation risk for laggards.

»» The media should focus their attention on laggards, and avoid penalising leading companies that demonstrate greater transparency.

15 Company Names HQ Sector Financial Year End Date Statement Due Date Statement Min. Requirements 3i Group plc UK Finance March 31, 2016 September 30, 2016 Link Yes Aberdeen Asset Management UK Finance September 30, 2016 March 30, 2017 Admiral Group UK Finance December 31, 2016 June 30, 2017 Anglo American UK Natural resources December 31, 2016 June 30, 2017 Antofagasta UK Natural resources December 31, 2016 June 30, 2017 ARM Holdings UK Technology December 31, 2016 June 30, 2017 Ashtead Group plc UK Construction & building April 30, 2016 October 30, 2016 Associated British Foods UK Agriculture/food/beverage September 12, 2016 March 12, 2017 AstraZeneca UK Health December 31, 2016 June 30, 2017 Aviva UK Finance December 31, 2016 June 30, 2017 Babcock International UK Professional services March 31, 2016 September 30, 2016 Link BAE Systems UK Military/weapons/security December 31, 2016 June 30, 2017 Barclays UK Finance December 31, 2016 June 30, 2017 Barratt Developments Plc UK Construction & building June 30, 2016 December 30, 2016 Berkeley Group Holdings UK Construction & building April 30, 2016 October 30, 2016 Link BHP Billiton Australia Natural resources June 30, 2016 December 30, 2016 Link Yes BP UK Natural resources December 31, 2016 June 30, 2017 British American Tobacco UK Agriculture/food/beverage December 31, 2016 June 30, 2017 British Land Company Plc UK Real estate March 31, 2016 September 30, 2016 Link Yes BT Group plc UK Technology March 31, 2016 September 30, 2016 Link Yes Bunzl UK Consumer products/retail December 31, 2016 June 30, 2017 Burberry Group UK Consumer products/retail March 31, 2016 September 30, 2016 Link Yes Capita plc UK Professional services December 31, 2016 June 30, 2017 Link Carnival US Travel November 30, 2016 May 30, 2017 Centrica UK Utilities December 31, 2016 June 30, 2017 Coca Cola HBC AG Switzerland Agriculture/food/beverage December 31, 2016 June 30, 2017 Compass Group UK Services September 30, 2016 March 30, 2017 Link CRH plc Ireland Construction & building December 31, 2016 June 30, 2017 DCC plc Ireland Professional services March 31, 2016 September 30, 2016 Link Diageo UK Agriculture/food/beverage June 30, 2016 December 30, 2016 Direct Line UK Finance December 31, 2016 June 30, 2017 Dixons Carphone UK Consumer products/retail April 30, 2017 October 30, 2017 Link Yes EasyJet UK Travel September 30, 2016 March 30, 2017 Experian Ireland Professional services March 31, 2016 September 30, 2016 Link Yes Fresnillo Mexico Natural resources December 31, 2016 June 30, 2017 GKN UK Construction & building December 31, 2016 June 30, 2017 GlaxoSmithKline UK Health December 31, 2016 June 30, 2017 Glencore Switzerland Natural resources December 31, 2016 June 30, 2017 Hammerson UK Real estate December 31, 2016 June 30, 2017 Hargreaves Lansdown UK Finance June 30, 2016 December 30, 2016 Hikma Pharmaceuticals PLC UK Health December 31, 2016 June 30, 2017 HSBC Holdings UK UK Finance December 31, 2016 June 30, 2017 Imperial Brands UK Agriculture/food/beverage September 30, 2016 March 30, 2017 Link Inmarsat UK Technology December 31, 2016 June 30, 2017 Intercontinental Hotel UK Leisure December 31, 2016 June 30, 2017 International Consolidated Airlines UK Travel December 31, 2016 June 30, 2017 Intertek Group UK Professional services December 31, 2016 June 30, 2017 Intu Properties plc UK Real estate December 31, 2016 June 30, 2017 ITV UK Media/publishing December 31, 2016 June 30, 2017 Johnson Matthey plc UK Chemical March 31, 2016 September 30, 2016 Link Yes Kingfisher UK Consumer products/retail January 31, 2017 July 30, 2016 Land Securities Group plc UK Real estate March 31, 2016 September 30, 2016 Link Legal & General UK Finance December 31, 2016 June 30, 2017 Link Lloyds Group UK Finance December 31, 2016 June 30, 2017 London Stock Exchange UK Finance December 31, 2016 June 30, 2017 Marks & Spencer UK Consumer products/retail April 2, 2016 October 2, 2016 Link Yes Merlin Entertainment UK Leisure December 26, 2016 June 26, 2017 Mondi S. Africa Manufacturing December 31, 2016 June 30, 2017 National Grid UK Utilities March 31, 2016 September 30, 2016 Link Yes NEXT UK Consumer products/retail January 30, 2017 July 30, 2016 Pearson UK Media/publishing December 31, 2016 June 30, 2017 Persimmon UK Construction & building December 31, 2016 June 30, 2017 Provident Financial UK Finance December 31, 2016 June 30, 2017 Link Yes Prudential UK Finance December 31, 2016 June 30, 2017 Randgold Resources UK Natural resources December 31, 2016 June 30, 2017 RDS ‘A’ Netherlands Natural resources December 31, 2016 June 30, 2017 RDS ‘B’ Netherlands Natural resources December 31, 2016 June 30, 2017 Reckitt Benckiser Group UK Consumer products/retail December 31, 2016 June 30, 2017 RELX Group plc UK Professional services December 31, 2016 June 30, 2017 Rexam UK Manufacturing December 31, 2016 June 30, 2017 Rio Tinto UK Natural resources December 31, 2016 June 30, 2017 Rolls-Royce Holding UK Manufacturing December 31, 2016 June 30, 2017 Royal Bank of Scotland UK Finance December 31, 2016 June 30, 2017 Royal Mail UK Shipping & handling March 27, 2017 September 27, 2017 RSA INS. UK Finance December 31, 2016 June 30, 2017 SABMiller plc UK Agriculture/food/beverage March 31, 2016 September 30, 2016 Link Sage Group UK Technology September 30, 2016 March 30, 2017 Link Sainsbury (J) UK Agriculture/food/beverage March 13, 2017 September 13, 2017 Schroders UK Finance December 31, 2016 June 30, 2017 Severn Trent UK Utilities March 31, 2016 September 30, 2016 Link Shire Ireland Health December 31, 2016 June 30, 2017 Sky Plc UK Media/publishing June 30, 2016 December 30, 2016 Link Smith & Nephew UK Health December 31, 2016 June 30, 2017 Smiths Group UK Technology July 31, 2016 January 31, 2017 Link Sports Direct UK Consumer products/retail April 24, 2016 October 24, 2016 SSE UK Utilities March 31, 2016 September 30, 2016 Link Yes St. James Place UK Finance December 31, 2016 June 30, 2017 Standard Charter UK Finance December 31, 2016 June 30, 2017 Standard Life UK Finance December 31, 2016 June 30, 2017 Taylor Wimpey UK Real estate December 31, 2016 June 30, 2017 Tesco UK Agriculture/food/beverage February 27, 2017 August 27, 2016 Travis Perkins UK Construction & building December 31, 2016 June 30, 2017 TUI AG Germany Travel September 30, 2016 March 30, 2017 UNILEVER UK Consumer products/retail December 31, 2016 June 30, 2017 United Utilities UK Utilities March 31, 2016 September 30, 2016 Link Yes Vodafone Group UK Technology March 31, 2016 September 30, 2016 Link Whitbread UK Agriculture/food/beverage March 3, 2017 September 3, 2016 Worldpay Group UK Technology December 31, 2016 June 30, 2017 WPP 16 UK Media/publishing December 31, 2016 June 30, 2017 Download this page as a data file here. statements. was usedintheanalysisof the CORE Coalition A specialacknowledgmentto and guidanceontheRegistry. collaborated withfortheirsupport the manykeystakeholderswehave Fund of the financialandstrategicsupport Modern Slavery Act Registry with Resource Centrehascreatedthe The Business&HumanRights Acknowledgements Humanity United . 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